The Kuwait Stock Exchange (KSE) lost 7.19% during the month of October 2009 as “Global” General Index ended the month at 203.70 points. This followed a loss of 2.36% in September-2009 while on a YTD basis the index return turned negative for the first time this year with a loss of 1.32%. The market capitalization reached KD32.9bn at the end of the month, registering a decline of 7.52% as compared to the previous month. Despite the surge in oil prices which close above US$81.00 on October 21, the KSE witnessed a declining trend for three consecutive weeks reaching its lowest level since May 25 as investors remain cautious regarding the third quarter results causing a sell-off spree.

The volume of shares traded on the bourse, decreased during October by 2.1% on a m-o-m basis, aggregating to 5.53bn shares. Likewise, the value of shares traded on the bourse declined by 21.47%, aggregating to KD1.11bn in October. National Bank of Kuwait was the top value leader for the month with 91.34mn shares changing hands at a value KD114.24mn. Gulf Finance House was the top volume leader for the month with 437.76mn shares changing hands at a value KD58.98mn.

The major gainers during the month were Al Madar Finance and Investment Co (30.8%), Mushrif Trading and Contracting Co. (13.1%),Tamdeen Real Estate Co. (11.7%), whereas major losers during the month were AREFInvestmentGroup (-35.8%), International Investment Group (-35.8%), IFA Hotels & Resorts Co. (-34.0%).

All sector indices ended in red during the month of October. The Investment Index was the major loser shedding 11.45%, followed by the Services Index, and the Industrial Index with a loss 9.02%, and 7.3% respectively. The Real Estate Index lost 7.08%, while the Banking Index lost 5.94%.

The Banking Index lost 5.94% during the month of October. Most banks ended in red during the month except for Burgan bank which gained 5.4%, and Al Ahli Bank of Kuwait which gained 2.0%. Burgan bank did not announce its results yet, while Al Ahli Bank of Kuwait reported third quarter net profit of KD4mn dropping 84% y-o-y, while net profit in 9M09 plunged 66% to KD24.3mn.The major loser in the banking sector was Kuwait Finance House (KFH) which lost 10.6%.

KFH reported third-quarter net profit of KD34.3mn declining 46% y-o-y, while net profit in 9M09 fell 52% to KD106.4mn. National Bank of Kuwait which was the value leader this month lost 6.3%. The bank announced its 9M09 results, reporting a net profit of KD201.5mn, a y-o-y decline of 17%, however, net profit for the quarter jumped 10% y-o-y. Gulf Bank which reported a loss of KD7.0mn in 9M09, lost 5.8% during October.

The Investment Index was the major loser during the month, dipping 11.45%. In the Investment sector, Al Madar Finance and Investment Co registered the highest gain of 30.8%, followed by Kuwait Projects Company Holding (KIPCO) which gained 5.4%. During October, KIPCO completed the issue of a US$500mn (KD143mn) bond under its US$ 2bn Euro Medium Term Note (EMTN) Programme. In addition, the company signed a loan agreement with National Bank of Kuwait (NBK) whereby KIPCO gets a KD80mn (US$279mn) for a period of five years to finance the company’s projects.

Aref Investment Group was the major loser in the investment sector, declining by 35.8%. Last month, the company signed an agreement with Kuwait Finance House (KFH) to reschedule KD132mn worth of Aref Investment Group's debt.

The Services Index shed 9.02% during the month of October. Zain which lost 10.8% during the month is still in talks regarding selling a 46% stake in the company. Investors led by Nasser Al Kharafi want KD2 ($7) per share for the 46% stake in Kuwait's Mobile Telecommunications Co. (Zain). Nasser Al Kharafi, announced that talks are ongoing. The proposed stake sale in Zain could be worth about US$13.7bn and is expected to be concluded in four months. Kharafi has an 11.2% direct stake in Zain. Kharafi Group announced in September with other unnamed investors that they agreed to sell the Zain stake to India's Vavasi Group, Indian state-run firms, Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), and Malaysian billionaire Syed Mokhtar al-Bukhary.

The Public Warehousing Company (Agility) which lost 7.9% during the month announced that it won a contract with USAID. Under the contract, Agility won a US$4mn order to receive and store food at Jacintoport in Houston in preparation for shipment to Djibouti Free Zone. The contract includes a one-year base and four-year options, with a maximum potential value of the contract of US$10mn a year. The company has been also appointed by Formula One Management (‘FOM”) UK and Yas Marina Circuit (“Yas Marina”) to be the official customs clearing and on-site handling agent for all Formula 1 (“F1”) shipments during the inaugural 2009 Formula 1 Abu Dhabi Grand Prix.

The Kuwait stock exchange reached its lowest levels this month, as investors remained cautious amidst third quarter results which are still showing losses especially among the financial sector causing a sell-off spree. Going forward, we expect that the short-term performance of the market will still be affected by corporate earnings as listed companies continue to announce their results for Q3-2009.